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2019 (9) TMI 519 - HC - VAT and Sales TaxNon-filing of statutory returns in terms of the Entry Tax Act - disclosure of purchase turnover of the vehicles and payment of entry tax at 12.5% - Entry of Goods into Local Areas Act, 1990 - reduction in the levy of entry tax - HELD THAT - Though the levy of entry tax and State sales tax are separate and distinct, the intention of section 4 appears to be that there should be a unified and integrated levy on the transaction of entry into and sale of a vehicle within a State. If an assessee is in a position to establish that it had defrayed the entry tax liability on a particular vehicle, credit to that extent would be available in computing sales tax liability on the sale of that vehicle. In the present case, there is, admittedly, a violation of statutory provisions insofar as the petitioner has not filed returns under the Entry tax Act. The excuse offered, of ignorance of law, does not constitute valid justification for non-compliance of statutory duties. That is one aspect of the matter. The other aspect is, that VAT liability of a higher percentage than entry tax, has admittedly been remitted by the petitioner - The crucial aspect is the timing of the two remittances. A return of entry tax is due on or before the 20th of a month immediately succeeding such taxable event accompanied by proof of payment of entry tax in terms of section 7 of the Entry Tax Act read with Rule 3(2) of the Tamil Nadu Tax on Entry of Motor Vehicles Rules, 1990. Section 4 envisages a set-off as between State Commercial Taxes and Entry Tax only in respect of an identified vehicle. This appears evident by use of the qualifying word such to precede the words scheduled goods in section 4(1), meaning thereby that where an importer pays entry tax, credit of such amount may be availed as set off in regard to the VAT paid on the sale of such scheduled goods . Thus if the vehicle had entered the State but had been sold interstate, the turnover from such inter-state sale would not be available for grant of credit for payment of Entry tax. Thus, a correlation qua vehicle has to be furnished by the assessee to establish that entry tax paid and VAT credit sought, are in respect of the same vehicle. This exercise is required for acceptance of the claim under Section 4. In this case, neither the objections filed by the petitioner before the officer nor the Writ affidavit provide details of such correlation. In the absence of the factual particulars as to (i) when a particular/identified vehicle entered the State of Tamil Nadu (ii) when such vehicle was sold and (iii) whether such sale was intra or inter-state, the claim of the assessee for set-off under section 4 cannot be granted merely for the asking - The transactions in this case cannot be said to be automatically revenue neutral. The assessments for being re-done by the Assessing Authority is set aside - petitioner will file returns of entry tax in terms of Section 7 of the Entry tax Act for the periods 2013-14, 2014-15 and 2015-16 on or before 23.09.2019 - petition disposed off.
Issues Involved:
1. Non-filing of returns under the Entry Tax Act. 2. Justification for non-compliance due to ignorance of law. 3. Claim for set-off of VAT paid against Entry Tax liability under Section 4 of the Entry Tax Act. 4. Requirement of personal hearing before finalizing assessments. 5. Imposition of penalty under Section 15(1) of the Entry Tax Act. Issue-wise Detailed Analysis: 1. Non-filing of returns under the Entry Tax Act: The petitioner, a dealer in two-wheelers, admitted to not filing returns under the Entry Tax Act for the periods 2013-14, 2014-15, and 2015-16. Despite filing monthly returns under the VAT Act, the petitioner failed to comply with the Entry Tax Act, which led to a common pre-assessment notice being issued on 30.09.2015. The notice required the petitioner to disclose the purchase turnover of vehicles and pay entry tax at 12.5%. 2. Justification for non-compliance due to ignorance of law: The petitioner claimed ignorance of the Entry Tax Act provisions, stating awareness only after an investigation by the Enforcement Wing on 18.09.2015. The petitioner argued that since VAT was paid at 14.5%, which was higher than the entry tax rate of 12.5%, the excess VAT should be set off against the entry tax liability. However, the court held that ignorance of law is not a valid justification for non-compliance with statutory duties. 3. Claim for set-off of VAT paid against Entry Tax liability under Section 4 of the Entry Tax Act: The petitioner sought to rely on Section 4 of the Entry Tax Act, which provides for a reduction in tax liability by setting off entry tax against VAT liability. The court analyzed Section 4 and concluded that there must be a one-to-one correlation between the vehicle on which entry tax is paid and the vehicle on which VAT is due. The petitioner failed to provide such correlation details, making the claim for set-off unsustainable. The court emphasized that the set-off is not automatic and requires specific conditions to be met, including the timing of tax remittances and proper documentation. 4. Requirement of personal hearing before finalizing assessments: The court noted that no personal hearing was granted to the petitioner before finalizing the assessments, despite a specific request. The court held that this procedural lapse warranted setting aside the assessments and directed the Assessing Authority to redo the assessments after granting a personal hearing. 5. Imposition of penalty under Section 15(1) of the Entry Tax Act: The court observed that the imposition of penalty under Section 15(1) of the Entry Tax Act requires an opportunity for a personal hearing, which was not provided in this case. Consequently, the court set aside the penalty and directed that it be reconsidered de novo in accordance with the law. Conclusion: The court set aside the assessments and directed the petitioner to file returns of entry tax for the relevant periods by 23.09.2019. The Assessing Authority was instructed to pass new assessment orders by 31.10.2019 after hearing the petitioner and properly applying Section 4 of the Entry Tax Act. The levy of penalty was also to be reconsidered de novo. The writ petitions were disposed of with no costs.
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